by Dana Halawi
BEIRUT, Sept. 5 (Xinhua) -- The U.S. Treasury's sanctions against Lebanese Jammal Trust Bank will not impact the banking sector, experts said.
On Aug. 29, the U.S. Treasury's office accused Lebanese Jammal Trust Bank of "brazenly enabling" Hezbollah's financial activities.
"Jammal Trust Bank provides support and services to Hezbollah's Executive Council and the Martyrs Foundation, which funnels money to the families of suicide bombers," said Sigal Mandelker, under secretary of the office of terrorism and financial intelligence of U.S. Treasury.
The bank has denied "each and every allegation" related to its alleged funding of Hezbollah.
Meanwhile, the Association of Banks in Lebanon (ABL) issued a circular on Monday calling on its members not to conduct any financial transactions or interbank operations with Jammal Trust Bank or any bank designated by the U.S. Treasury's Office of Foreign Assets Control list.
ABL also announced that the sanctions imposed by the U.S. Treasury on Lebanese Jammal Trust Bank will not impact Lebanon's banking sector.
Likewise, experts and bankers interviewed by Xinhua believe that this measure has raised concerns and created some confusion but it will not impact the banking sector.
An owner of a Lebanese bank told Xinhua on condition of anonymity that these sanctions will not impact the banking sector because the size of Jammal Trust Bank constitutes less than 0.4 percent of the sector in Lebanon.
"The banking sector would have definitely been impacted if sanctions were imposed on a bigger bank," the banker said.
This measure may have, however, created some confusion but depositors will definitely be able to recuperate their money, he added.
In a short statement, Lebanon's Central Bank Governor Riad Salameh said on Tuesday that "all deposits that comply with Lebanese law and the central bank's circulars are secure" and can be collected when they mature. He was "reassured that things are going well," the statement added.
Raed Khoury, chairman of Cedrus Invest Bank, said that the banking sector will not be impacted by the latest sanctions on Jammal Trust Bank.
"Depositors will eventually get their money," he added.
Khoury explained that such sanctions do not impact confidence in the overall banking sector because they target one bank which will eventually be sold similar to the Lebanese Canadian Bank's case.
In 2011, the Beirut-based Lebanese Canadian Bank was charged by the U.S. of money laundering and direct links with Hezbollah and was acquired later by Societe Generale de Banque au Liban.
Khoury said that sanctions against one small bank won't impact confidence in the banking system.
"What really impacts confidence in the whole country is economic slowdown," he added.
Bassem Bawab, business professor at the American University of Beirut, reiterates Khoury's comments by saying that the banking sector is safe.
"There won't be a negative impact on the banking sector because banks are taking precautions," he said, adding that the bank will be eventually sold.
In fact, Bawab believes that there should be mergers and acquisitions among banks in Lebanon because the market does not need such a high number of financial institutions.
Bawab believes that more sanctions will target banks and individuals in the future because money laundering activities do prevail in Lebanon.
Meanwhile, Khoury believes that these measures cannot be predicted but the U.S. surely aims to continue its pressure on Hezbollah to limit its activities.
Last week, President of the Association of Banks in Lebanon Salim Sfeir said that the U.S. administration had no intention to hit more Lebanese banks with sanctions.
"There will be no new U.S. sanctions on Lebanese banks following the steps taken against Jammal Trust Bank," Sfeir told reporters after holding talks with Lebanese President Michel Aoun at Baabda Palace.
